cpc

procedure and documentation for incorporation of private limited company:

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PROCEDURE AND DOCUMENTATION FOR INCORPORATION OF PRIVATE LIMITED COMPANY:
 
 [list=1]A few names shall be selected (at least Six in the order of priority) for applying to Registrar of Companies. Reference may be made to the provisions of Emblems and Names (Prevention of Improper Use) Act, 1950 and the guidelines issued by the Central Government from time to time regarding availability of name.[/list]  [list=1]Director Identification Number (DIN) has to be obtained from Ministry of Companies Affairs for all proposed Directors, before applying Form No1A for name availability.[/list]  [list=1]Digital signature for the signing director has to be obtained from TCS certified authorities as all the forms to  be filed by any person with Registrar of Companies has only to be digitally signed one.[/list]  [list=1]An application for name availability shall be made to Registrar of Companies in Form No.1A of Companies General Rules and Forms, accompanied with a fee of Rs.500/-.[/list]  [list=1]Registrar of Companies shall follow the guiding instructions prescribed by the Department of Company Affairs dated 5[sup]th[/sup] May, 1962, 27[sup]th[/sup] September, 1974; clarification dated 13[sup]th[/sup] March, 1989; Circular No.6/99 dated 12[sup]th[/sup] May, 1999 as well as the following points before approving the name.[/list]  
┬╖        The object clause of memorandum of association corresponds to the main objects stated in the application.
 
┬╖        A name which includes the words ΓÇÿstock exchangeΓÇÖ should not be approved unless the same has been given ΓÇÿin principle approvalΓÇÖ or ΓÇÿNo objectionΓÇÖ by Securities and Exchange Board of India.
 
┬╖        No prior approval of Securities and Exchange Board of India is required before making available the proposed name or incorporation of a company for carrying on activities as merchant bankers, registrar to an issue, investment adviser, portfolio manager, etc.
 
┬╖        In case the proposed name consists of some key words, the significance thereof should be explained.
 
┬╖        At least one promoter as per name availability application is the subscriber to the memorandum and articles of association and other have no objection in such registration.
 [list=1]Registrar of Companies should confirm the name availability, within fifteen days of receipt of application.The approved name is valid for a period of 60 Days from the date of intimation by the Registrar. The applicant may apply for extension for retention of such name for a further period of thirty days.After the name has been approved by the Registrar of Companies, then arrangement shall be made for drafting of the Memorandum and articles of association. The same should be vetted, preferably be Company Secretary and approved by the registrar before they are finally printed.[/list]  [list=1]Memorandum and articles shall be stamped as per the Indian Stamp Act or the relevant State Act. The Memorandum and the articles shall then be signed by at least 2 subscribers each of whom shall also write in his own hand, his fatherΓÇÖs name, occupation, address and the number of shares subscribed for and have it witnessed by at least one person, who shall also write in his own hand, his fatherΓÇÖs name, occupation and address. [/list]  [list=1]It must be ensured that the memorandum and articles is dated on a date after the date of stamping.[/list]  [list=1]Within 6 months from the date of intimation of name clearance by the Registrar of Companies, following documents shall be submitted to the Registrar for registration of the Company after paying registration and filling fee. Minimum registration fee is Rs.4,800/- (for minimum Paid up capital of Rs.1,00,000/-).[/list]  
(a)   Three copies of memorandum and articles duly signed and witnessed, out of which one copy should be stamped with adhesive stamp;
 
(b)  Declaration of Compliance in Form No.1 of Companies General Rules and Forms;
 
(c)   Form No.32 (in duplicate) giving particulars of directors;
 
(d)  Form No.18 giving intimation of the location of registered office;
 
(e)  Original copy of RegistrarΓÇÖs letter regarding availability of name;
 
(f)    Power of Attorney on non-judicial stamp paper of requisite values by all subscribers authorising one of them or any other person to make corrections in the papers and documents fields for registration as may be required by the Registrar and to collect certificate of incorporation;
 
(g)   Agreement, if any, proposed for the appointment of managing or whole time director or manager.
 [list=1]The Registrar after scrutinizing the documents shall register the Company and issue Certificate of Incorporation.[/list]  
We are also enclosing the check list for DIN Form & Check list for preparing Incorporation documents.
 
IN CASE ALL THE SUBSCRIBERS TO THE MEMORANDUM ARE OUTSIDE INDIA THEN ALL THE DOCUMENTS PHYSICALLY TO BE SIGNED BY THE SUBSCRIBERS HAVE TO BE SIGNED BEFORE THE PRESENCE OF NOTARY PUBLIC OR INDIAN CONSULATE IN THAT COUNTRY.
 
ALTERNATIVELY, IF THE COMPANY SITUATE OUTSIDE INDIA HAPPENS TO BE ONE OF THE SUBSCRIBERS TO THE MEMORANDUM, THEN SUCH COMPANY SHALL PROVIDE BOARD RESOLUTION AUTHORIZING ANY ONE PERSON IN INDIA WHO IS ALSO A SUBSCRIBERS TO THE MEMORANDUM TO SIGN ALL RELEVANT DOCUMENTS FOR INCORPORATION ON BEHALF OF SUCH COMPANY.
TO PUT NUTSHELL
 Company registration[list]As per Indian law there needs to be 2 directors to register a company in India. One share to be nominated to some one here to start the company registration that will be returned.Digital signatures certificate application forms of all persons, 2 directors and 1 nominee need to be submitted for company registration. I will be submitting my form tomorrow or the day after.* Proposed name of the company with 6 preferences in order. * Address proof of the 2 Directors and 1 nominee (addresses out side India need to be attested by the Indian embassy).* Letter from the Board of directors nominating one person with company share to do the company registration in India. * Letter of no objection, if required, from the board of directors to use the same name for the Indian Company.[/list] IF PROMOTED BY FOREIGN COMPANY
 
It is better (to avoid unnecessary procedures and time delay) to get subcription money from a Company outside India rather than getting subscription from an individual outside India.

For example:

IF THE AUTHORISED CAPITAL OF THE PROPOSED COMPANY IS RS.1,00,000 DIVIDED INTO 10,000 EQUITY SHARES OF RS.10 EACH, THEN IT IS ADVISABLE THAT ………………… FOREIGN COMPANY .CAN SUBSCRIBE 9999 SHARES AND REMAINING 1SHARE CAN BE SUBCRIBED BY ANY ONE INDIVIDUAL IN INDIA AS NOMINEE OF FOREIGN COMPANY.THEREUPON 100% OWNERSHIP WILL BE HELD IN THE NAME OF THE FOREIGN COMPANY.

For incorporating the company in the above manner, only the board resolution (duly notarised by notary public in that state) authorizing the person holding 1 share as nominee to incorporate the proposed company and to carry out all related matters in connection with incorporation of above company is required to complete all the formalities to incorporate a new company in India.
 
Taxation[list]Foreign nationals will not be liable for the 40% tax for foreign investors as our industry does not come under this taxation. We would be taxed the normal 33.66% as per any Indian company on profit annually on net profit.Some amount of this 33.66% can be offset with company expenses. [/list]  Operations[list]Administrative powers to be held by the management in the Indian company to be executed only on approval from the director(s).Financial powers to be held by the directors. DirectorΓÇÖs remuneration up to any amount can be repatriated subject to the 33.66% tax.If the foreign Company and the Indian company is owned by Same promoter then the billing from the Indian company to the foreign company and the funds being directed back to foreign company might be an Issue with the RBI (Reserve Bank of India) and also to have no issues with transfer pricing, it is advised to bill all outsourced projects directly to the clients. Any projects handled for foreign company shall be billed directly so that the transfer pricing can be easily established as well as funds being directed back to foreign Company will not be any issue.[/list] [align=center]FEMA ASPECTS  [/align]  
[align=center]ESTABLISHMENT OF PLACE OF BUSINESS IN INDIA BY FOREIGN ENTITIES.[/align]  
Approval from RBI
 [list=1]No person resident outside India shall, without prior approval of the RBI, establish in India a liaison office.  But provided that no approval shall be necessary for banking companies if such company has obtained necessary approval under the provision of the Banking Regulation Act, 1949.Provided that no approval shall be necessary from RBI for a company to establish a unit in Special Economic Zone to undertake manufacture and service activities A person desiring to establish a liaison office in India shall make an application to RESERVE BANK, in FORM FNC 1.[/list]  
 
Features:
 [list=1]The liaison office in India shall not carry any activity other than the activity for which approval has been granted by the RBI/IRDA.The liaison officer in India shall not enter into any business contracts in its own name without prior permission of RBI/IRDA.No commission or fees will be charged or any other remuneration received by the Liaison Office in India for liaison activities or any other service rendered by it in India either directly or indirectly, unless approved by the IRDA.The entire expenses of the Liaison Office in India will be met exclusively out of the fund received from the aboard through normal banking channels.The Liaison Office in India shall not borrow or lend any money from/ to any person in India nor shall it accept deposits in India.The liaison office, in India shall not acquire, hold (otherwise than by way of leasing for the period not exceeding of Five years) transfer or dispose of any immovable property in India without obtaining the prior permission of the RBI under FEMA .The Liaison Office, in India shall furnish to the IRDA, on an annual basis, a certification from the auditor that the Office complied with the following terms and conditions stipulated in the letter of approval issued by IRDA/RBI and that all the expenses are met by way of approval means.For Liaison Office established with IRDA/RBI approval, the closure will be allowed by IRDA under the intimation to RBIThe Liaison office in India will not have signing powers, except to the extent required for normal functioning of the office, on behalf of the Head office.The Foreign Insurance Company which has opened the Liaison Office in India under this general permission for maintain the accounts in their books of liaison office in India. Subject to the condition the Credit should represent the funds received from Head office for meeting expenses in liaison office and Debit represents the local expense in liaison office.The activities of these offices may be verified by IRDA/RBI/Government of India by carrying out a scrutiny as and when found necessary.The Liaison office should obey the laws in force in India and no compromise for the ignorance of Indian legal system in any manner.[/list]  
Activities undertaken by Liaison Office:
 
                   RBI permitted the liaison office in India to carry the following activities hereunder:
(i)                Representing in India the parent company/group companies.
(ii)             Promoting export import from/to India
(iii)           Promoting technical/financial collaborations between parent/group companies and companies in India.
(iv)            Acting as a communication channel between the parent company and Indian companies.
 
FUNDS LYING WITH LIAISON OFFICE IN INDIA OF FOREIGN COMPANIES:
 
A branch in India of foreign companies were allowed to keep the funds temporarily in terms deposits with maturity period of three months with the same branch of authorized dealer to whom the account was maintained and Later the RBI decided to extend the maturity period from 3 months to 6 months for the term deposits of branch in India of foreign companies. Authorized dealers were satisfied with the term deposits of temporary surplus funds and branch undertaking the maturity proceeds of the term deposits will be utilized for their business in three months of maturity. However. Such facility is not extended to shipping or airline companies.
 
 
Remittance of Profit or Surplus:
A person resident outside India permitted by the RBI to establish a branch in India may remit outside India the Profit of the Branch of the project on its completion, net of applicable Indian taxes, on production of the following documents, and establishing the net profit or surplus, as the case may be, to the satisfaction of the authorized dealer through whom the remittance is effected.
 [list=1]For remittance of profit of a branch:[/list] (a)  certified copy of the audited balance sheet and profit and loss account for the relevant year:
(b)  a Chartered AccountantΓÇÖs certificate certifying:-
(i)                the manner of arriving at the remittable profit,
(ii)             that the entire remittable profit has been earned by undertaking the permitted activities, and
(iii)           that the profit does not include any profit on revaluation of the assets of the branch.[list=1]For remittance of surplus on completion of the project[/list] (a)  certified copy of the final audited project account;
(b)  a Chartered AccountΓÇÖs certificate showing the manner of arriving at the remittable surplus.
(c)  Income tax assessment order or either documentary evidence showing payment of income tax and other applicable taxes, or a chartered accountant certificate stating that sufficient funds have been set aside for meeting all Indian tax liabilities; and
(d)  AuditorΓÇÖs certificate stating that no statutory liabilities in respect of the project are outstanding.
 
 
 
 
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Advocate

Valuable information.
Thanks Megna.
 
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